 "Shree Cement plunges 10%; hits 5-month low amid ongoing Income Tax survey")
Shares of Shree Cement plunged 10 per cent to Rs 22,630.40 on the BSE in Monday’s intra-day trade after Income Tax department, last week, initiated a survey action at five locations of the cement manufacturer. In past two trading days, the stock has slipped 12 per cent. It hit lowest level since January 2023.
Shree Cement in its press release clarified on the income tax surveys, saying the entire management team of the company is extending full cooperation to the officials and that any information circulating in the media otherwise is incorrect.
“We have gathered that a lot of negative information about the company and its officials is floating in certain sections of the media in connection with the above survey. We would like to clarify that the survey is still going on,” Shree Cement said in a press release on Saturday, June 24.
The entire management team of the company is available and extending full cooperation to the officials. Any information circulating in the media otherwise is incorrect and has been published without seeking prior inputs from the company, the company said.
At 09:28 AM; Shree Cement quoted 6 per cent lower at Rs 23,653, as compared to 0.13 per cent rise in the S&P BSE Sensex.
Shree Cement is the flagship company of the BG Bangur group and had domestic cement capacity of 46.4 million tonne per annum (MTPA) as on March 31, 2023 and power generation capacity of 820.4 MW as on March 31, 2023.
The company is continuously adding capacity across various regions. In the northern region, the clinker unit with capacity of 3.8 MTPA and grinding unit with capacity of 3.5 MTPA in Nawalgarh, Rajasthan, is expected to be commissioned by the end of fiscal 2024. The clinker unit of 1.5 MTPA and grinding unit of 3 MTPA in Guntur, Andhra Pradesh is likely to be commissioned by December 2024.
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The company's wholly owned subsidiary, Shree Cement East Private Ltd (SCEPL) is also setting up a grinding unit of 3 MTPA in Purulia, West Bengal, which is expected to be commissioned in June this fiscal. Shree Cement is also setting up a solar power plant with capacity of upto 106 MW across various locations.
Commencement of operations in these units will further strengthen its market position. The company is likely to undertake capital expenditure (capex) of Rs 2,500-3,000 crore each year to increase the domestic capacity to around 57 MTPA by fiscal 2025. The capex will be funded through surplus in cash accrual and liquidation of investments.
“The ratings continue to reflect the strong business risk profile of SCL, backed by its established market position in northern India, increasing presence in eastern India and entry in the southern and western markets along with cost-efficient operations. The ratings also factor in its strong financial risk profile. These strengths are partially offset by susceptibility to risk of volatility in input cost and realisation, commoditised and cyclical nature of the cement industry. Any substantial, debt-funded capex or acquisition, which may weaken the financial risk profile, will be a key rating sensitivity factor,” rating agency CRISIL said in rationale.
“As a responsible corporate citizen, Shree Cement follows the highest corporate governance standards. We are extending full cooperation with the Income Tax Department for the ongoing survey. The survey is yet to conclude, and we dismiss the speculative reports about tax evasion,” the company said in a stock exchange filing.
“As a responsible corporate citizen, Shree Cement follows the highest corporate governance standards. We are extending full cooperation with the Income Tax Department for the ongoing survey. The survey is yet to conclude, and we dismiss the speculative reports about tax evasion,” the company said in a stock exchange filing.
Technical View
Bias: Negative
Target: Rs 22,180; Rs 21,000
Resistance: Rs 24,025
With the sharp fall in the last two trading sessions, shares of Shree Cement are now trading below all the key moving averages, thus a negative bias indicates chart.
Today's gap-down has forced the stock break significantly below the 200-DMA (Daily Moving Average) which stands at Rs 24,025. The bias is likely to favour the bears as long as the stock trades below the 200-DMA.
On the downside, the stock has near support at Rs 22,180 - which is the super trend line as per the weekly chart. Break and close below the same, could trigger another round of sell-off towards the Rs 21,000 mark.
(With inputs from Rex Cano)